8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)     November 18, 2003    

INFORMATION ANALYSIS INCORPORATED

(Exact name of registrant as specified in its charter)

Virginia	0-22405	54-1167364
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

11240 Waples Mill Road, Suite 400, Fairfax, Virginia	22030
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code     (703) 383-3000    

(Former name or former address, if changed since last report)

Item 7.    Financial Statements and Exhibits

(c) Exhibits

The following exhibit is attached hereto:

Exhibit No.	Description
99.1	Press Release dated November 18, 2003 captioned:
	“Information Analysis Inc. Reports Third Quarter Results”

Item 9.    Regulation FD Disclosure

The following information is being furnished pursuant to both Item 9 and item 12 of Form 8-K.

On November 18, 2003, Information Analysis Incorporated issued a press release reporting earnings and other financial results for its third quarter ended September 30, 2003. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 12.    Results of Operations and Financial Condition

The information set forth in Item 9 is incorporated herein by this reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Information Analysis Incorporated (Registrant)
Date:    November 21, 2003	By:	/S/ Richard S. DeRose
		Richard S. DeRose, Executive Vice President, Treasurer, and Chief Financial Officer

EX-99.1

Exhibit 99.1

For additional information contact:

Richard S. DeRose (703) 293-7901

For release:

November 18, 2003 at 9:00 a.m.

Information Analysis Inc. Reports Third Quarter Results

FAIRFAX, VIRGINIA – Information Analysis Inc. (IAIC:OTCBB) today reported results for the third quarter of fiscal 2003 ended September 30, 2003. Revenues were $1,483,000, up from the $1,224,000 reported in 2002’s third quarter. The information technology services company reported a net income of $11,000, or $0.00 per share basic and diluted, compared to a net loss of $30,000, or $0.00 per share basic and diluted, in 2002’s third quarter

For the nine months ended September 30, 2003, IAI’s revenues were $3,586,000, compared to revenues of $4,837,000 for the same period in 2002. The Company reported a net loss of $254,000, or ($0.02) per share basic and diluted, in contrast to a net income of $144,000, or $0.01 per share basic and diluted, reported for the comparable 2002 period.

“We experienced an increase in the third quarter revenue compared to the first two quarters of the year, and have returned to profitable operations. I am encouraged by what we have accomplished during this quarter to position the Company for the rest of this year and the future,” said Sandor Rosenberg, Chairman and Chief Executive Officer of IAI. “Our contract wins have contributed to our increased revenue stream. In addition, we have continued to contain and reduce general and administrative expenses, a measure which contributes to both overall profitability and reduced cash flow requirements.

“The Company is continuing the active pursuit of the conversion and system modernization business in addition to developing business opportunities in the area of Web applications. We have been working on some large opportunities which should significantly build our pipeline for the upcoming year. This increased activity should help make the company stronger and give us momentum as we enter 2004 and beyond.

“We still are in merger and acquisition discussions with a number of firms and hope to complete a transaction in the future.”

About Information Analysis Incorporated

Information Analysis Incorporated (www.infoa.com), headquartered in Fairfax, Virginia, is an information technology services company. The Company is a web solution provider and software conversion specialist, modernizing legacy systems and extending their reach to the internet world.

Additional information for investors

This release may contain forward-looking statements regarding the Company’s business, customer prospects, or other factors that may affect future earnings or financial results. Such statements involve risks and uncertainties which could cause actual results to vary materially from those expressed in the forward-looking statements. Investors should read and understand the risk factors detailed in the Company’s 10-KSB for the fiscal year ended December 31, 2002 and in other filings with the Securities and Exchange Commission.

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Information Analysis Inc. Reports Third Quarter Results

November 18, 2003

Page 2 of 4

Information Analysis Incorporated

Condensed Consolidated Income Statements

	Three months ended September 30,
(in thousands, except per share data; unaudited)	2003			2002
Revenue:
Professional fees	$	1,426		$	944
Software sales		57			280
Total revenue		1,483			1,224
Cost of goods sold and services provided:
Cost of professional fees		1,140			705
Cost of software sales		59			134
Total cost of sales		1,199			839
Gross margin		284			385
Selling, general and administrative expense		264			406
Operating income (loss)		20			(21	)
Other expense		(9	)		(9	)
Income (loss) before income taxes		11			(30	)
Provision for income taxes		—			—
Net income (loss)	$	11		$	(30	)
Earnings per common share:
Basic: Net income (loss)	$	0.00		$	0.00
Diluted: Net income (loss)	$	0.00		$	0.00
Shares used in calculating earnings per share:
Basic		10,283,515			10,283,515
Diluted		10,329,468			10,283,515

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Information Analysis Inc. Reports Third Quarter Results

November 18, 2003

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Information Analysis Incorporated

Condensed Consolidated Income Statements

	Nine months ended September 30,
(in thousands, except per share data; unaudited)	2003			2002
Revenue:
Professional fees	$	3,339		$	4,301
Software sales		247			536
Total revenue		3,586			4,837
Cost of goods sold and services provided:
Cost of professional fees		2,610			2,979
Cost of software sales		242			346
Total cost of sales		2,852			3,325
Gross margin		734			1,512
Selling, general and administrative expense		967			1,355
Operating (loss) income		(233	)		157
Other expense		(21	)		(13	)
(Loss) income before income taxes		(254	)		144
Provision for income taxes		—			—
Net (loss) income	$	(254	)	$	144
Net loss per share:
Basic: Net (loss) income	$	(0.02	)	$	0.01
Diluted: Net (loss) income	$	(0.02	)	$	0.01
Shares used in calculating earnings per share:
Basic		10,283,515			10,283,515
Diluted		10,283,515			10,923,515

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Information Analysis Inc. Reports Third Quarter Results

November 18, 2003

Page 4 of 4

Information Analysis Incorporated and Subsidiaries

Consolidated Balance Sheets

	As of September 30, 2003			As of December 31, 2002
(in thousands)	(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	4		$	81
Accounts receivable, net		1,284			824
Prepaid expenses		96			29
Other receivables		24			16
Total current assets		1,408			950
Fixed assets, net		32			43
Capitalized software, net		84			146
Note receivable		85			85
Investments		6			6
Other assets		37			51
Total assets	$	1,652		$	1,281
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	882		$	474
Accrued payroll and related payroll items		238			215
Other accrued liabilities		206			128
Revolving line of credit		537			403
Deferred revenue		120			138
Total current liabilities		1,983			1,358
Long-term debt		125			125
Total liabilities		2,108			1,483
Common stock, par value $0.01, 30,000,000 shares authorized; 11,788,126 shares issued, 10,283,515 outstanding at September 30, 2002 and December 31, 2001, respectively		118			118
Additional paid in capital		14,122			14,122
Accumulated deficit		(13,836	)		(13,582	)
Accumulated other comprehensive income		(6	)		(6	)
Less treasury stock; 1,504,611 shares at cost		(854	)		(854	)
Total stockholders’ equity		(456	)		(202	)
Total liabilities and stockholders’ equity	$	1,652		$	1,281

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